A government approval would normally be required at the end of the project development phase. Activities related to procurement in the next phase can follow this approval.
For government approval, an interim business case30 for the project may be prepared by the project team/transaction advisor based on the outcome of the feasibility study. In some countries, there are specific information requirements for government approval at this stage.
The interim business case proposal for approval could be expected to contain information on, among others, justifications for pursuing the project and selection of the PPP model, key details about the project, expected costs, financial and economic viability, financing plan, proposed risk allocation, responsibilities of, and liabilities (fiscal or otherwise) on government, justifications for government support (if proposed), and implementation plan and arrangements.
The interim business case should also provide assessment of all financial and budgetary, institutional, legal, regulatory, physical and other socio-economic factors that constrain and/or enable the project. When possible, the business case should also establish the value for money for the project according to the selected PPP model.
The interim base case is finalized after the preparation and finalization of tender documents in the next phase.
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30 The understanding of the public sector about what constitutes a business case for a project is different from that of the private sector. For a private sector company, a business case in simple terms would mean if the project is commercially viable, legally tenable and administratively implementable, and is within its technical, managerial and financial capacity.